Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, June 8, 2023

AI Summary. The US Treasury is set to rebuild its depleted cash balance through heavy short-term borrowing, with JPMorgan estimating a need for $1.1tn in short-dated Treasury bill issuance. Analysts warn the volume of new issuance could push up government debt yields and draw cash out of bank deposits.

Kate Duguid Financial Times
Date Posted:

JP Morgan estimates that the US will need to borrow at least $1.1T in short-dated Treasury bills by the end of 2023. The deluge is expected to stress markets and raise yields.

JP Morgan estimates that the US will need to borrow at least $1.1T in short-dated Treasury bills by the end of 2023. The...

Will a surge in short-term government borrowing strain bank deposits?

Core argument: JPMorgan estimates the US Treasury will need to borrow $1.1tn in short-dated Treasury bills by the end of 2023, including $850bn in net bill issuance over the next four months.

Following the resolution of [the debt ceiling] dispute — which had previously prevented the US from increasing its borrowing — the Treasury department will seek to rebuild its cash balance, which last week hit its lowest level since 2017.   JPMorgan has estimated that Washington will need to borrow $1.1tn in short-dated Treasury bills by the end of 2023, with $850bn in net bill issuance over the next four months.  A principal concern voiced by analysts was that the sheer volume of new issuance would push up yields on government debt, sucking cash out of bank deposits.

Takeaways by Macro Roundup® AI

  1. JPMorgan estimates the US Treasury will need to borrow $1.1tn in short-dated Treasury bills by the end of 2023, including $850bn in net bill issuance over the next four months.
  2. The Treasury will move to rebuild a cash balance that fell to its lowest level since 2017, following resolution of the debt ceiling dispute that had prevented the US from increasing its borrowing.
  3. Analysts' principal concern is that the volume of new issuance will push up yields on government debt, sucking cash out of bank deposits.

AI Summary. Rising gross domestic product has been more than offset by falling gross domestic income, so by current measures the US economy appears to have contracted in four of the last five quarters even as payroll employment and real personal income have kept rising. Either the job market will crack or output measures will catch up with it.

Justin Fox Bloomberg
Date Posted:

US GDP has contracted in four out of the last five quarters, but labor markets remain robust. @foxjust argues “This can’t go on forever. At some point either the job market will crack or other economic measures will begin to catch up with it.”

Can employment keep rising while output measures show contraction?

Core argument: Rising GDP over the past two quarters has been more than offset by falling gross domestic income, leaving the US economy appearing to have contracted in four of the last five quarters as the measures now stand, before revisions.

During the past two quarters rising GDP has been more than offset by falling GDI. As the measures stand now (there are many revisions to come), the US economy appears to have contracted in four of the last five quarters. Meanwhile, payroll employment has grown and grown. Last spring, three of the five indicators were dropping but employment and industrial production were quite strong. Late last year, industrial production fell sharply, but other indicators were mixed. Payroll employment has continued to rise throughout, joined in recent months by the other “most reliable” indicator, real personal income. The jobful recession-that-isn’t-quite-a-recession continues. This can’t go on forever. At some point either the job market will crack or other economic measures such as GDP and GDI will begin to catch up with it.

Takeaways by Macro Roundup® AI

  1. Rising GDP over the past two quarters has been more than offset by falling gross domestic income, leaving the US economy appearing to have contracted in four of the last five quarters as the measures now stand, before revisions.
  2. Payroll employment has grown throughout this stretch of apparent contraction, joined in recent months by real personal income, the other indicator described as "most reliable.".
  3. The divergence cannot persist indefinitely: either the job market will crack or measures such as GDP and GDI will begin to catch up with employment.

AI Summary. Citi projects labor shortages, permitting challenges and other constraints will push lithium prices up as much as 40% and copper prices up 50%. Seasonally adjusted mining industry employment has shrunk by nearly 39% since 1990 as power generators moved away from coal, according to the Bureau of Labor Statistics.

Hardika Singh and David Uberti Wall Street Journal
Date Posted:

A labor shortage in the mining sector is expected to slow firms’ abilities to expand production in the face of higher demand. Citi Group forecasts lithium prices will be up 40% by the end of the year and copper up 50% by 2025.

Will mining labor shortages push lithium and copper prices higher?

Core argument: Citi forecasts lithium prices rising as much as 40% by year's end, driven by labor shortages, permitting challenges and other issues facing miners.

Citi expects labor shortages, permitting challenges and other issues will propel lithium prices higher by as much as 40% by year’s end. It forecasts copper will jump 50% by 2025, noting that it is less vulnerable than some other metals to recent innovations for electric-vehicle batteries. The overall industry’s seasonally adjusted head count shrank by nearly 39% since 1990 as power generators turned away from coal, according to the Bureau of Labor Statistics. Colleges and universities have struggled to rebuild the depleted talent pipeline. “The problem is that talent isn’t lying around waiting to be paid more—there just isn’t enough of it,” said Andrea Brickey, an associate professor of mining engineering and management at the South Dakota School of Mines & Technology.

Takeaways by Macro Roundup® AI

  1. Citi forecasts lithium prices rising as much as 40% by year's end, driven by labor shortages, permitting challenges and other issues facing miners.
  2. Citi projects copper will jump 50% by 2025, noting copper is less vulnerable than some other metals to recent innovations for electric-vehicle batteries.
  3. Mining industry seasonally adjusted head count shrank by nearly 39% since 1990 as power generators turned away from coal, according to the Bureau of Labor Statistics, and colleges and universities have struggled to rebuild the depleted talent pipeline.

AI Summary. Full-time registered West Coast longshore workers earned an average of $197,514 excluding benefits, with clerks averaging $220,042 and foremen and walking bosses $306,291, according to the Pacific Maritime Association. The association also paid $100,534 per union registrant in benefits, including full insurance, a 401(k), and a pension capped at $95,460 a year.

Greg Miller Freighwaves
Date Posted:

Port operations on America’s west coast are being disrupted by labor activity. @freightwaves reports that full time dock workers have mean earnings that are 9% higher than dentists and just $5,600 less than airline pilots.

How much do West Coast dockworkers earn in pay and benefits?

Core argument: Full-time registered West Coast longshore workers earned an average of $197,514 in 2022 excluding benefits, according to the Pacific Maritime Association, with full time defined as 2,000 or more hours per year, or 38.4 hours per week.

Full-time registered longshore workers earned an average of $197,514 in 2022, not including benefits, according to the Pacific Maritime Association. Full time is defined as working 2,000 hours or more per year, or 38.4 hours per week. Clerks working full time earned an average of $220,042 and foremen and walking bosses averaged $306,291. The PMA also paid $100,534 per International Longshore and Warehouse Union registrant in benefits costs. Benefits include full insurance coverage, a 401(k) and a pension with a maximum yearly retirement benefit of $95,460.

Takeaways by Macro Roundup® AI

  1. Full-time registered West Coast longshore workers earned an average of $197,514 in 2022 excluding benefits, according to the Pacific Maritime Association, with full time defined as 2,000 or more hours per year, or 38.4 hours per week.
  2. Full-time clerks averaged $220,042 and foremen and walking bosses averaged $306,291, according to the Pacific Maritime Association.
  3. The Pacific Maritime Association paid $100,534 per International Longshore and Warehouse Union registrant in benefits costs, covering full insurance, a 401(k), and a pension with a maximum yearly retirement benefit of $95,460.

AI Summary. Analysts identify 14 S&P 500 firms with significant artificial intelligence exposure that together account for 73% of the stockmarket rally, with Nvidia alone a fifth as its market value rose from under $400bn to $925bn. The average price-to-earnings multiple of those firms leapt from 43 to 77.

Economist Staff The Economist
Date Posted:

Investor excitement in AI is a key factor in the recent stock market recovery. @The Economist reports that 73% of the S&P 500 rally since November 2022 has been driven by 14 firms with significant AI exposure.

Investor excitement in AI is a key factor in the recent stock market recovery. @The Economist reports that 73% of the...

How much of the stockmarket rally comes from AI-exposed firms?

Core argument: Nvidia's market capitalisation rose from under $400bn to $925bn since the end of November, accounting for a fifth of the stockmarket rally.

Analysts reckon that the S&P 500 has 14 firms with significant exposure to AI. These include well-known giants, such as Google and Microsoft, and lesser-known providers of underlying infrastructure, like Arista and NetApp, two data-centre companies. On its own, the price of Nvidia is responsible for an enormous slice of the stockmarket recovery. Since the end of November, the firm’s market capitalisation has soared from under $400bn to $925bn—accounting for a fifth of the rally. Add Nvidia’s surge to the growing market capitalisations of the 13 other firms with ai exposure and a remarkable 73% of the broader rally is explained. The boom in ai stocks has comfortably outstripped the wider tech rebound. The NASDAQ is up by a fifth since November, compared with a third for the most ai-exposed firms. In November the average price to current earnings multiple of an S&P 500 firm, excluding the 14 most exposed to ai, was around 27. As we went to press, the multiple had dipped to 26. Meanwhile, the average multiple of firms in our ai bucket had leapt from 43 to 77.

Takeaways by Macro Roundup® AI

  1. Nvidia's market capitalisation rose from under $400bn to $925bn since the end of November, accounting for a fifth of the stockmarket rally.
  2. The 14 S&P 500 firms with significant AI exposure, including Google, Microsoft, Arista and NetApp, together explain 73% of the broader rally.
  3. The average price-to-current-earnings multiple of the AI-exposed S&P 500 firms leapt from 43 to 77, while the multiple for the other firms dipped from around 27 to 26.

AI Summary. China's productivity growth has slowed and its working-age population is shrinking, with the UN projecting a decline of more than 100m people aged 15-64 in the 2030s. Several forecasters project China's GDP will overtake America's sometime in the 2030s, while Capital Economics argues that if it does not, it may never happen.

Economist Staff The Economist
Date Posted:

Wall Street analysts and think tanks have reduced their estimates of future Chinese economic growth, pushing out the date when China will overtake the US. The Economist Intelligence Unit currently projects this will occur in 2039.

Will China's GDP overtake America's?

Core argument: The UN projects China's population aged 15–64 will decline by more than 100m in the 2030s, with China's workforce already shrinking and its productivity growth slowed.

Postponements of China’s date with economic destiny have cast some doubt on whether it will ever happen. The country’s productivity growth has slowed, and its demographics have turned. China’s workforce is already shrinking, a decline that will probably accelerate in future decades. The UN projects that China’s population aged 15-64 will decline by more than 100m in the 2030s. If China’s GDP does not overtake America’s by the middle of that decade, it may never do so, according to Capital Economics, a research firm. The OECD, the Lowy Institute, and the Centre for Economics and Business Research, project that China’s GDP will overtake America’s at some point in the 2030s. The Economist Intelligence Unit thinks it will happen in 2039. That prediction is strikingly close to Goldman Sachs’s original date [of 2041], set 20 years ago.

Takeaways by Macro Roundup® AI

  1. The UN projects China's population aged 15–64 will decline by more than 100m in the 2030s, with China's workforce already shrinking and its productivity growth slowed.
  2. Capital Economics argues that if China's GDP does not overtake America's by the middle of the 2030s, it may never do so.
  3. The OECD, the Lowy Institute, and the Centre for Economics and Business Research project China's GDP will overtake America's during the 2030s, while the Economist Intelligence Unit puts the date at 2039, close to Goldman Sachs's original 2041 estimate.

AI Summary. The US, Taiwan and Japan plan to share real-time data from naval reconnaissance drones, with Taiwan's four MQ-9B Sea Guardian drones integrated into the same system used by US forces in the region and Japan's Self-Defense Force. The arrangement would let the US and its allies view the same drone-gathered information simultaneously.

Kathrin Hille and Demetri Sevastopulo Financial Times
Date Posted:

The US, Japan, and Taiwan are integrating real time reconnaissance data, a critical step in developing a common operational picture in the event of war over Taiwan.

The US, Japan, and Taiwan are integrating real time reconnaissance data, a critical step in developing a common operational...

Will the US and its allies share real-time drone surveillance data?

Core argument: General Atomics is due to deliver four MQ-9B Sea Guardian reconnaissance drones to Taipei beginning in 2025, and Washington would allow the aircraft to be integrated into the same system used by US forces in the region and Japan's Self-Defense Force.

The US, Taiwan and Japan are to share real-time data from naval reconnaissance drones. US defence contractor General Atomics is due to deliver four MQ-9B Sea Guardian drones to Taipei beginning in 2025. Washington would allow the aircraft to be integrated into the same system that US forces in the region and the Japanese Self-Defense Force will use. This would allow the US and its allies and partners to observe the same information gathered simultaneously by the unmanned aerial vehicles — a set-up referred to as a common operational picture.

Takeaways by Macro Roundup® AI

  1. General Atomics is due to deliver four MQ-9B Sea Guardian reconnaissance drones to Taipei beginning in 2025, and Washington would allow the aircraft to be integrated into the same system used by US forces in the region and Japan's Self-Defense Force.
  2. The US, Taiwan and Japan are to share real-time data from naval reconnaissance drones, allowing the US and its allies and partners to observe the same information gathered simultaneously by the unmanned aerial vehicles, a set-up referred to as a common operational picture.

Friday, June 9, 2023

AI Summary. Bidenomics rests on the claims that growth's quality matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should favor workers over consumers. Defining market failure that broadly—covering regional, racial and gender inequities, rural internet access and child care costs—leaves no limiting principle on government intervention.

Greg Ip Wall Street Journal
Date Posted:

.@greg_ip notes that markets are more efficient than governments in allocating scarce resources, but “Bidenomics sees market failure all around” and thus has “no limiting principle on government intervention.”

.@greg_ip notes that markets are more efficient than governments in allocating scarce resources, but “Bidenomics sees...

Does a broad market failure definition limit government intervention at all?

Core argument: Bidenomics rests on three premises, according to the author: that the quality of economic growth matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should prioritize American workers over consumers.

First, the quality of economic growth matters more than the quantity. Second, laissez-faire is out, industrial policy is in. Third, trade policy should give priority to American workers, not consumers. Basic economics tells us that capital and labor are finite, so they need to be allocated in a way that maximizes productivity and growth. Experience has shown, painfully, that governments are much worse at this than markets. Market failures exist, of course, such as pollution or military vulnerability, but they are exceptions. Bidenomics accepts the value of markets but sees market failure all around, in everything from regional, racial and gender inequities to the lack of rural high-speed internet and affordable child care. When market failure is so broadly defined, there is effectively no limiting principle on government intervention.

Takeaways by Macro Roundup® AI

  1. Bidenomics rests on three premises, according to the author: that the quality of economic growth matters more than its quantity, that industrial policy should replace laissez-faire, and that trade policy should prioritize American workers over consumers.
  2. The author argues that because capital and labor are finite, they must be allocated to maximize productivity and growth, and that experience has shown governments are much worse at this allocation than markets.
  3. Bidenomics accepts the value of markets but sees market failure in regional, racial and gender inequities and in the lack of rural high-speed internet and affordable child care, a definition so broad that the author finds no limiting principle on government intervention.

AI Summary. The authors estimate that China-born researchers working in the US contributed to 27% of US-addressed scientific papers, while China-born researchers with US experience who returned home contributed to 38% of China-addressed papers. Papers with these authors averaged more citations and appeared more often in high-impact journals than other papers.

Qingnan Xie and Richard Freeman National Bureau of Economic Research
Date Posted:

In 2018 Chinese born researchers contributed to 27% of American research papers, Chinese born researchers who had returned to China from the US contributed to 38% of Chinese research papers. @NBERpubs

How much do China-born researchers contribute to US and Chinese science?

Core argument: The authors estimate that China-born "diaspora" researchers working in the US contributed to 27% of US-addressed papers, while "returnee" researchers who gained US research experience and returned to China contributed to 38% of China-addressed papers.

The close connection between US and China in scientific research and education in the 2000s produced a large group of China-born researchers who work in the US (“diaspora”) and a larger group of China-born researchers who gained US-research experience and returned to do their research in China (“returnee”). We estimate that diaspora researchers contributed to 27% of US addressed papers, and that returnee researchers contributed to 38% of China addressed papers. In terms of quality or impact, papers with diaspora or returnee authors averaged more citations and had higher proportions of publication in high CiteScore journals than other US-addressed or China-addressed papers. The link between the countries’ research began to fray from 2018 through the early 2020s, with potential deleterious effects on each country’s future research output and on global science to which US and China are the two biggest contributors.

Takeaways by Macro Roundup® AI

  1. The authors estimate that China-born "diaspora" researchers working in the US contributed to 27% of US-addressed papers, while "returnee" researchers who gained US research experience and returned to China contributed to 38% of China-addressed papers.
  2. Papers with diaspora or returnee authors averaged more citations and were published in high-CiteScore journals at higher rates than other US-addressed or China-addressed papers.
  3. The US–China research link began to fray from 2018 through the early 2020s, with potential deleterious effects on each country's future research output and on global science, to which the US and China are the two biggest contributors.

AI Summary. Venture firms' annual internal rate of return turned negative at -7%, the lowest since 2009, according to PitchBook Data, while U.S. startup funding fell 55% year over year to $37bn in a quarter. A prolonged depressed venture market pushes more startups toward shutting down.

Yuliya Chernova Wall Street Journal
Date Posted:

According to @pitchbook, the annual internal rate of return for venture capital firms was -7% in Q3 2022, the lowest return since 2009. @wsj

Are falling venture returns and funding forcing more startups to shut down?

Core argument: Venture firms' yearly internal rate of return was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data.

The yearly internal rate of return for venture firms was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data. The venture market, meanwhile, has been declining. Startups in the U.S. raised $37 billion in the first quarter of this year, down 55% from the first three months of last year. The longer the venture market stays depressed, the closer many startups get to the moment of truth.

Takeaways by Macro Roundup® AI

  1. Venture firms' yearly internal rate of return was negative 7% in the third quarter of 2022, the lowest value since 2009, according to PitchBook Data.
  2. U.S. startups raised $37 billion in the first quarter, down 55% from the first three months of the prior year.

AI Summary. Local government data show killings down 12% overall across nine of the 10 most populous U.S. cities versus the comparable period a year earlier, with declines in six, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia. Dallas, San Antonio, and Austin reported slight increases.

Zusha Elinson Wall Street Journal
Date Posted:

Homicides in major American cities are down 12% year-over-year. @wsj

Are homicides declining across the largest U.S. cities?

Core argument: Killings are down 12% across nine of the 10 most populous U.S. cities compared with the same time frame last year, according to local government data.

Killings are down 12% overall in nine of the 10 most populous cities compared with the same time frame last year, according to local government data. Homicides are down in six of those cities, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia. In Texas, the cities of Dallas, San Antonio and Austin reported slight upticks. San Diego didn’t provide data. The 2023 data available from the cities had different end dates, ranging from April to this week.

Takeaways by Macro Roundup® AI

  1. Killings are down 12% across nine of the 10 most populous U.S. cities compared with the same time frame last year, according to local government data.
  2. Homicides fell in six of those cities, including 27% in Los Angeles, 22% in Houston, and 16% in Philadelphia.
  3. Dallas, San Antonio and Austin reported slight upticks in homicides, San Diego did not provide data, and the 2023 city figures carried end dates ranging from April onward.